Insider Blog

Why Employee Engagement? Because it works!

There is nothing new about the importance of Employee Engagement as a measure of company health. CEOs, Consultants, Academics, and all sorts of people have been talking about it for years. Here are some classic examples:

“To win in the marketplace you must first win in the workplace.” Doug Conant, CEO of Campbell’s Soup

“When people are financially invested, they want a return. When people are emotionally invested, they want to contribute.” Simon Sinek, best-selling author and TED speaker

“Engaged employees stay for what they give (they like their work); disengaged employees stay for what they get (favorable job conditions, growth opportunities, job security.)” Blessing White’s The State of Employee Engagement (annual report)

Ask any business leader whether they prefer engaged employees or disengaged employees and the answer is obvious. Why? Because a company’s level of employee engagement is positively correlated with other metrics of business success, including customer satisfaction, service quality, sales, employee retention, profit and shareholder return. But don’t take our word for it – there are dozens of research studies that have demonstrated this correlation.

“There are only three measurements that tell you nearly everything you need to know about your organization’s overall performance: employee engagement, customer satisfaction, and cash flow. It goes without saying that no company, small or large, can win over the long run without energized employees who believe in the mission and understand how to achieve it.”

Jack Welch, former CEO of GE

Forbes Columnist, and New York Time Best Selling Author Kevin Kruse focuses on Employee Engagement in his new book, Employee Engagement 2.0, and published a list of 32 findings of how employee engagement positively impacts business results. As he tells it, “An employee’s discretionary effort results in the Engagement-Profit chain. Because they care more, they are more productive, give better service, and even stay in their jobs longer. All of that leads to happier customers, who buy more and refer more often, which drives sales and profits higher, finally resulting in an increase in stock price.”

Here is a sampling of statistics from the studies cited by Kevin Kruse:

Employees’ customer service productivity scores and employee engagement scores had a correlation of .51.(1)

In a leading department store chain, customers scored higher in customer engagement when they were serviced in departments with employees who had high levels of employee engagement.(2)

Morrison Management Specialists increased client satisfaction by 1 percentage point for every 2 percentage point increase in employee engagement. (4)

A Fortune 100 manufacturing company reduced quality errors from 5,658 parts per million to 52 parts per million.(5)

Molson Coors found that engaged employees were five times less likely than non-engaged employees to have a safety incident and seven times less likely to have a lost-time safety incident.(6)

A Fortune 100 manufacturing company reduced turnover from 14.5% to 4.1%, while absenteeism dropped from 8% to 4.8%.(7)

Employees with lower engagement are four times more likely to leave their jobs than those who are highly engaged.(8)

In companies where 60 to 70 percent of employees were engaged, average total shareholder’s return (TSR) stood at 24.2 percent; in companies with only 49 to 60 percent of their employees engaged, TSR fell to 9.1 percent; companies with engagement below 25 percent suffered negative TSR.(9)

Sears measured that a 5 point improvement in employee attitudes drove a 1.3 point improvement in customer satisfaction, which in turn drove a 0.5% improvement in revenue.(10)

Study of 89 companies compared top quartile and bottom quartile engagement scores and found that those in the top quartile had 2.6 times higher earnings per share (EPS) than that of the below-average scores.(11)

A study of 64 organizations revealed that organizations with highly engaged employees achieve twice the annual net income of organizations whose employees lag behind on engagement.(12)

The results are clear: Optimizing Employee Engagement is just good business.

Engaged employees are loyal and contribute more to the company’s success. If you’re not measuring and improving your overall employee engagement, you should be! Infosurv Research’s Employee Engagement Model has been used successfully by many companies to measure and improve Employee Engagement. To learn more about Employee Engagement Surveys at Infosurv Research read last week’s blog.